Xcite Energy Cancels ‘Rowan Norway’ Rig Option

Xcite Energy Resources Limited (“XER”), has cancelled its option for a jack-up drilling unit from British American Offshore Limited, a subsidiary of Rowan Companies, Inc. The rig contract was initially entered into in February 2011 and subsequently amended in February 2012 ahead of the pre-production extended well test on the Bentley field, which was completed in September 2012.

“Following the extended well test, which has led to the significant increase in reserves and updated field development plan, the Company no longer believes the terms and structure of the rig option to be appropriate for its commercial objectives,” said XER in a statement.

XER also added that it has been in constructive dialogue with other drilling rig providers to develop alternative commercial solutions, which potentially would deliver better strategic alignment and fit for purpose structures to reflect the amended Bentley field development programme. Consequently, Expressions of Interest have now been issued to a number of drilling rig providers to formally develop an optimised drilling solution for the Bentley field.

Rupert Cole, CEO of Xcite Energy, commented:

“We are grateful for the provision of the Rowan Norway and the associated drilling support during the successful extended well test last year. The amendments to the Bentley field development plan have given us the opportunity to construct a more commercially attractive and longer term approach to drilling up the field, and we are encouraged by the alternative structures that the industry has to offer. We look forward to updating the market in due course on the outcome of this initiative, which could further enhance the economics of the Bentley field development.”